Contractor license may be revoked even without an indictment
An amendment to the law has expanded the registrar's powers in the fight against crime in the industry. A court ruling clarifies how a decision based on classified information is made and what the oversight mechanisms are.
A contractor who has been registered in the Contractors' Register for years may assume that their license is at real risk only if they have been convicted of a crime or at least if an indictment has been filed against them. Amendment 8 to the Law on the Registration of Contractors for Construction Engineering Works, which came into effect in December 2024, expanded the registrar's powers and added an explicit ground allowing action to be taken based on a police recommendation as well.
The amendment granted the Registrar of Contractors the authority not to register a contractor, or to cancel their registration, if they are convinced based on a written recommendation from a senior police officer that the contractor is involved in acts that could harm public peace and security or cause substantial damage to the industry. In other words, the procedure is administrative-regulatory, and it is not necessarily required to wait for a criminal verdict.
The background to the amendment is the infiltration of criminal elements into the construction industry and the difficulty in dealing with phenomena such as extortion (protection), threats to contractors, pushing them out of projects, and bid rigging. In such cases, the information held by the police may be intelligence-based and classified, and sometimes it cannot be fully disclosed to the contractor without compromising sources or police activity.
However, the police recommendation is not supposed to automatically lead to the revocation of the license. The law requires the Registrar of Contractors to exercise discretion and examine, among other things, the nature of the acts and their scope, their severity and circumstances, their connection to the contracting business, whether these acts constitute a crime, and the passage of time. Before making a decision, the contractor must be given an opportunity to present their arguments, and if they raise arguments concerning the police recommendation, the registrar must forward them for the response of a senior police officer before making the decision.
Heavy consequences for contractors
The difficulty is sharpened when the decision is based on information that the contractor themselves is not allowed to see in full. A court ruling given in July 2026 at the Administrative Court in Tel Aviv regarding 'Torab Investments and Development' dealt with exactly this point. The Registrar of Contractors cancelled the company's registration after receiving a police recommendation and information that the company is allegedly linked to the Abu Latif criminal organization and activities related to bid rigging. The Appeals Committee accepted the appeal, cancelled the registrar's decision, and ordered the company to be returned to the Contractors' Register, after determining that the classified material on which the decision was based was not presented to all members of the committee.
However, the court recently accepted the state's appeal and ruled that the chairman of the Appeals Committee is authorized, with the consent of the other members of the committee, to review the classified material alone, and even raw material that was not presented to the Registrar of Contractors, while the other members of the committee will be exposed to the open material and a summarized paraphrase. The role of the chairman, according to the ruling, is to examine the material and reflect to the other members of the committee, within the limits of confidentiality, whether the classified material supports the paraphrase presented to them.
Equally important: the court did not decide whether the allegations against the company are true and did not determine on the merits whether it was justified to cancel its license. It decided on the question of authority and returned the discussion to the Appeals Committee. Until a new decision is made, the decision of the Registrar of Contractors to cancel the license remains in effect.
The significance for contractors is broader than the specific case. Registration in the Contractors' Register is a central business asset, and a procedure that begins with police information can quickly affect the contractor's ability to perform work, compete in tenders, and continue existing contracts. Therefore, when a notice of a hearing or an intention to take action before the registrar is received, the question is not only whether a criminal investigation exists, but what the administrative infrastructure is, what has been provided to the contractor, and what arguments can be raised at this stage. The tools added to the Registrar of Contractors are intended to provide an answer to a difficult phenomenon in the industry, but their use may have heavy consequences for the activity of a contracting company. Precisely for this reason, alongside the enforcement powers, the hearing procedure and the oversight of the Appeals Committee and the court are also of great importance.
